The US budget deficit will hit 1.8 trillion US dollars this year, a record amount, according to US Congress estimates. The White House said the prediction by the Congressional Budget Office (CBO) would not alter President Barack Obama's policy agenda, nor would it affect its goal to cut the deficit in half by 2013, it added.
The CBO also predicted that President Obama's budget would result in a total deficit of 9.3 trillion over 2010-2019, worse than the White House had anticipated. This means the US national debt held by the public would double over the next decade if Obama's budget is enacted into law.
The US debt held by the public would double to 82% of GDP by 2019 under Obama's budget, from 41% last year, according to CBO. If current law remained unchanged, debt held by the public would rise to 56% of GDP in 2019.
Obama's budget would add 4.8 trillion to cumulative federal deficits over that decade, boosting their total from 4.4 trillion under current law to 9.3 trillion US dollars.
The highest previous post-World War II deficit was 6% of GDP in 1983, and it was considered dangerously high. Ronald Reagan, a conservative Republican president, and a Democratic-majority Congress agreed to raise taxes and cut spending to reduce future deficits.
The massive deficit forecasts come after President Obama's 3.55 trillion US dollars budget plan for the 2010 financial year, which includes big spending programs to address healthcare, education and curb greenhouse gas emissions.
The CBO also issued gloomy forecasts for the US economy, projecting that it will contract 3% in 2009 before growing 2.9% next year and expanding 4% in 2011.
Republican Senator Chuck Grassley said that the administration should curb its spending initiatives.
The buck stops with the American taxpayer. People can afford only so much government spending, even for the worthiest-sounding causes, he said.
Democrats insist the huge deficit won't crimp Obama's ambitious agenda and the White House reminds daily that Obama inherited a terrible fiscal situation.
However Democrats are likely to curb somewhat Obama's request for a 9% increase in non-defence agency budgets.
The reality is we are going to have to make adjustments to the president's budget if we want to keep the deficit on a downward trajectory, said Senate Budget Committee Chairman Kent Conrad, Democrat from North Dakota.